How much of a minefield is the Nottingham buy-to-let market?

The buy to let sector in Nottingham (and in fact the whole of East Midlands) is doing very well at the moment, but, we warned, it can be a minefield. I could regale you with many stories where investors have got it tremendously wrong, like some modern apartments in the North West development near the city centre, that were sold for around £176,000 in 2008, only to be selling today for £143,500, a drop of over 18%. It is interesting to note that at that time in 2008 for £176,000, you could have bought a lovely 4 bed, bay-fronted detached in Woodthorpe or a three bed semi-detached house in Wilford. In hindsight, an apartment for the same price as a decent semi, or nice modern detached house doesn’t quite stack up.  So, if you make even if you were to make a small mistake, it could still prove to be very costly.

So what should you buy in our part of the world? One option is Houses of Multiple Occupation (HMOs). Whilst they can be profitable, chiefly in the student market with Nottingham University students, they can make things much more complex and costly, especially with the need for HMO licences etc. Mortgage rates on buy-to-let are really low at the moment and for the right property and person you can get rates below 3.9% if you put down a decent deposit of 25% (although, the best rates are saved for deposits of 40% and higher). As I type this, you can get a 5-year fixed rate buy to let mortgage from the Post Office for 3.65%. It’s also worth remembering that a higher deposit will also ensure you have plenty of equity in the property if the property market stagnates in the future. The important thing to remember is the amount you can borrow is driven by the rental income, so it is vital you can identify a property with a decent yield that lets easily.

Finally though, if are investing so much time and money in building wealth for you and your family, it is equally important for you to identify ways to protect it. Do not forget, if you spend years building a successful property empire in Nottingham, when you pop your clogs, your family could face an inheritance tax bill of 40%, which they would have to pay within six months of the death. In a buoyant market, selling in six months is not an issue, but what if the market was like it was in Nottingham between 2008 and 2012, when things took seasons to sell, not weeks?! Quite apart from losing nearly half of the assets you built for your family to the tax man, if they had to sell some of your portfolio - possibly at a discount because the taxman wanted his money so quick - it might be wise to consider some life insurance that will offer protection against inheritance tax.

Whilst there are plenty of good advisors in Nottingham that can help you with mortgage brokering and life insurance (we aren’t exactly one of those, since our specialty is property), what we can help with is choosing the right property to buy. It’s in our interest to do so, because if we offer the best advice and opinion and you make a decent profit, you might consider (although there is no obligation) to trust us to manage the property too. If you fancy hearing more, email me at jaclyn.bartlett@centrickproperty.co.uk .

A perfect potential rental in Nottingham

Apartments are popping up everywhere at the moment in Nottingham at the minute,  a great sign for landlords, tenants and the Nottingham property market. I came across this little gem this morning and what a apartment it is. Take a look at the property for yourself here: http://www.rightmove.co.uk/property-for-sale/property-36100647.html

Located a short walk from Nottingham City Centre the apartment offers two  bedrooms, en-suite, master bathroom. allocated parking and kitchen appliances. This is a perfect property for any investors looking to for a rental property close to the city centre.

The property is currently on the market with Centrick Property with an asking price of £150,000. A property of this standard in Nottingham City Centre would achieve a rental income of approximately £800pcm, this would achieve an approximate yield of 7%.

This property is one not to be missed, the perfect investment property, in the centre of Nottingham with no upward chain and ready for tenants to move it to... what are you waiting for?

If you would like any information or advice on the Buy to Let market please email me on jaclyn.bartlett@centrickproperty.co.uk

Modern two bedroom apartment in Nottingham City Centre

 Investment properties are popping up everywhere at the moment in Nottingham, which is a great sign for landlords, tenants and the Nottingham property market. I stumbles across this property this morning, a great deal for such modern property. Take a look at it here for yourself: http://www.zoopla.co.uk/for-sale/details/35312683

Located in Nottingham City Centre the apartment offers two double bedrooms, en-suite, master bathroom. allocated parking, onsite leisure facilities and integrated kitchen appliances. This is a perfect property for any investors looking for a property that will not require works to be done other than a clean before tenants move in.

The property is currently on the market with Martin & Co with an asking price of £130,000. A property of this standard in Nottingham City Centre would achieve a rental income of approximately £900pcm, this would achieve an approximate yield of 8%.

This property is one not to be missed, the perfect investment property, in the centre of Nottingham with no upward chain and ready for tenants to move it to... what are you waiting for?

If you would like any information or advice on the Buy to Let market please email me on jaclyn.bartlett@centrickproperty.co.uk

There might be a slow down in sales, but house prices are still on the up.

Property values in Nottingham rose by 1.3% in March. This follows several months of sluggish activity in the property market in the run up to the Election, putting the average price of a property in Nottingham at £167,600, 4.7% higher than in March 2014.

Interestingly, the Council of Mortgage Lenders and Estate Agent trade bodies over the last few months have reported seeing a fall in mortgage lending and enquiries from prospective homebuyers. This is important because it comes amid an overall fall in housing market activity. Data from the Land Registry said completed house sales in Nottingham in the three months to January 2015, (the most up-to-date figures available) fell by 3.75% compared to the same three month period up to January 2014.

However, I believe that the slowdown in property sales in Nottingham is supporting property values, as there is a shortage of houses coming onto the market. Even though in the whole of the first quarter of 2015, property value increases may seem subdued when compared to 2014, let us remember, property values are still rising well above the level of inflation. 

As I have said many times before, the population in Nottingham is growing at a much higher rate than the number of properties being built. This increasing demand for a roof over people’s head, which is outpacing the supply of new houses being built in Nottingham, is creating a severe imbalance in the housing market, thus making homeownership an ever increasingly distant dream for many potential first time buyers.

In fact, I still maintain the view that house prices are likely to rise by around 3 to 5% in Nottingham in 2015, even after taking into account this blip at start of the year. The reason being is that the rise reflects both strong economic conditions and steady market conditions with (and this is the most important factor) very low numbers of properties on the market. 

Many Buy to Let landlords know that investing in the Nottingham property market is a long-term strategy of 10, 20 even 30 years. Governments come and go, but unless Nottingham City Council start to build hundreds of new properties a year to make up for the shocking lack of supply, Nottingham people will always want a roof over their head, and irrespective of which party is in power, if there aren’t any council houses, a demand for rental properties will always remain.

As my existing landlord clients will testify, whether you manage your property yourself, or another agent manages your properties, everyone is always made to feel welcome when they pop in for a coffee at our offices by Nottingham station to discuss anything to do with the property market and how Nottingham compares with its closest rival towns. I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion. However, if you are too busy to pop into town, you could always visit my Property Blog www.nottinghampropertyblog.com for advice, intelligent commentary and analysis of the Nottingham Property market.

Look at this end terrace house in Carlton, Nottingham...

Are you looking for a rental property with a difference? Well this property is for you...http://www.zoopla.co.uk/for-sale/details/36855603

A charming two bedroom end of terrace house located in a quite cul-de-sac in close proximity to Carlton Hill, with easy access to Nottingham City Centre. The property offers two bedrooms, family bathroom, front and rear garden, modern fitted kitchen and an open living space. This property is a perfect investment property, with low maintenance needs when first brought and is almost ready for tenants to move into. A property of this standard would attract tenants looking to live a short distance from Nottingham City, surrounded by local amenities and great transport links.

If you are looking for something a little different and something with charm, then this is the property for you.

Thinking of purchasing a Buy to Let property? Need advice on how to get the most for your money? Well I am here to help, any advice you would like on investing please contact me on  Jaclyn.bartlett@centrickproperty.co.uk

Is the lack of housing supply hurting or benefiting the market?

Since the 1960’s more people have owned their own home than rented - but, for many young Nottingham people, the dream of buying their own home is becoming increasingly difficult. Since the turn of the Millennium, in Nottingham (as in the rest of the Country) there has been a significant change in the proportion of people who own their own home in Solihull. In 2001, 49.42% of homes in Nottingham were owner occupied; today the figure is 45.08% - a significant decline in such a short time.  Buy to let landlords are rubbing their hands in glee, whilst young people struggle to afford a house deposit (unless they inherit money or are given a loan from the Bank of Mum and Dad).

In Nottingham, only 29% of 25 to 34 year olds have a mortgage. Although the national average is 35.93% in the same age bracket! It just shows how different parts of the country have different housing markets. However, the really interesting fact is this  ...Roll the clock back to 1991 and nationally, 67% of 25 to 34 year olds had a mortgage. After WW2, the supply of properties being built kept up with demand as millions of council homes were built (the most being built in 1950s, surprisingly under Tory Governments!). Also private house building increased in the 1950’s, but especially in the 1960’s and 1970’s, and as the Country  got more prosperous it meant that by 1971, there were more home owners than renters.

However, since the 1970’s, the population has grown but the number of new properties being built hasn't kept up at the same rate, the result is that there have been huge rises of property prices in the early ‘70s, the late 80s and more recently between 1999 and 2004. Interestingly, since the early 1970’s, out of the 34 richest countries in the world, the UK has seen highest property prices rises.

95% mortgages have been available to first time buyers since late 2009, but with property prices rising by 182.7% since the spring of 1996, as property prices have been rising and first time buyers have been saving, the amount they have to save is continually rising at the same time. The stress on saving even for that kind of deposit, coupled with the new stricter mortgage rules introduced in 2014, means that most 20/30 something’s are increasingly renting instead of buying.

The issue quite simply comes back down to a lack of new homes being built. In Nottingham, only 1,001 properties a year are being built; whilst the population is rising by 3,864 a year. The supply of new homes has been limited by planning laws, local councils not having the money to build council houses, hard hitting green belt limitations, and of course those with Not In My Back Yard (NIMBY) syndrome.  With a rising population and net migration, especially from the EU, the mismatch between demand and supply is why we have the problem. Until politicians have the backbone to realise the country needs a lot more decent homes built, the problem will just get worse.

In the meantime, demand for rental property will continue to grow because people need a roof over their head at the end of the day ......fact!

764% Return for Nottingham Buy To Let landlords since 1999?

Buy-to-let is a different kettle of fish compared to investing in stocks and shares or putting money in the Building Society. Whilst these other investments (ISAs, Funds, Share trading) are passive (i.e. once the money has been invested, you leave it alone) with buy-to-let, things are more hands on, in fact it’s generally a business for most. In fact, most of the landlords I speak to, say that they like the buy-to-let option specifically because it is both an investment as well as a business. Having an ‘active’ involvement and being able to make key decisions, rather than entrusting them to others (such as city whizz kids in London playing roulette with their Pension Pot) can be very beneficial.

So if you are investing in the Nottingham property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, (also known as capital appreciation) has been strong in recent times in Nottingham, but you’ll still have to bear in mind that property values do go up as well as down - just like shares do – although the initial purchase price rarely decreases over long periods of time.  Also, rental income, which is what a tenant pays you, will hopefully grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.

I was talking to a landlord who bought a terraced house in the Long Eaton area of Nottingham. He bought a very pleasant 2 bed terraced house in 1999 for £37,000. It sold again in February just gone for £107,750, a rise of 191.21% in just over 15 years – a compound annual return of 7.39%.

However, the real returns are for those Nottingham landlords who borrowed money to purchase their buy to let property. They have made significantly higher returns than those who paid 100% cash. If the landlord had borrowed 75% of the £37,000 purchase price of the Long Eaton terraced house on an interest only 75% mortgage, he would have only needed to invest £9,250 (as his 25% deposit... borrowing the remaining £27,750), but his £9,250 would be worth today, £80,000  (£107,750 less £27,750 interest only mortgage)... a rise of 764.86% - a compound annual return of 15.47%... and I haven’t even mentioned the rent he would have received in those 15 years!

This demonstrates how the Nottingham buy to let market has not only provided very strong returns for average investors since 1999 but how it has permitted a group of motivated buy to let Nottingham landlords to become particularly wealthy. In fact, if this landlord had continued to remortgage the property as it went up in value, he could by our reckoning have had an additional two or three properties (albeit with larger mortgages but greater future potential).

As my article mentioned a few weeks ago, more and more Nottingham people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what (and would not) make a decent property to buy in Nottingham for buy to let, then one place for such information would be the Nottingham Property Blog (www.nottinghampropertyblog.com) or email me direct on jaclyn.bartlett@centrickproperty.co.uk.

A unique duplex apartment in Nottingham...

A fantastic investment opportunity has just popped up on the market this morning. This is one not to be missed, take a look at the property here for yourself: http://www.zoopla.co.uk/for-sale/details/36748462

  A perfect one bedroom duplex apartment located in a restored Grade ll Brewery, dating back to 1800's.The accommodation comprises of a modern kitchen/living area, bathroom, downstairs cloakroom and double bedroom. There is also allocated parking and communal storage area with bike store. This is a great property for all tenants looking for combining luxury with convenience. 

This property is currently on the market with ourselves for an attractive asking price of £89,950. A property of this standard would achieve a rental income of approximately £550 pcm, this would achieve an approximate yield of  7.3%. The yield will exclude any service charges or ground rent that is required to be paid. 

Another property in the Nottingham market that you would be mad to miss out on. Book a viewing now to see the true beauty for yourself!

Should you need any further information or would like to discuss investment opportunities please email me, jaclyn.bartlett@centrickproperty.co.uk

Rents Paid By Tenants In Nottingham On The Rise

With roughly a third of the year already gone (scary isn’t it?!) I was talking to landlord from Burton Joyce the other day about what is happening to the level of rents that are being achieved in the Nottingham property market.

It appears that rents being achieved for ‘new’ rentals (ie when the tenant moves out and new tenant moves in) have risen in the order of 3% in the last 12 months on top of the range modern properties, yet remained static for older Victorian terraced houses and converted apartments. However, landlords with existing sitting tenants, irrespective of age are not increasing their rents, as most landlords prefer to keep their existing tenant paying the same rent and have the peace of mind that their tenant remains, paying the rent (thus reducing the risk of a void period).

It must be remembered rents dropped by 7.7% over 2008/9, due to oversupply in the rental market in 2009.) A lot of the people who couldn’t sell their property in Nottingham in 2008/9 when the Credit Crunch hit in 2008, decided to let their house out instead of selling at a loss. In fact, the number of houses on the market in Nottingham dropped by 56.7% between April 2008 and March 2010, a lot of which came on to the rental market in Nottingham. However, looking at the longer term, tenants haven’t had it too bad as, since the turn of the Millennium, average wages have grown by 46%, but rents outside London have only grown by 36% rental growth over this period.

I indicated to the landlord that there is a lack of new rental properties coming on the market, in fact according to the Office of National Statistics, there are only 83 new rental properties in Nottingham each month, but the population of Nottingham is rising by 322 people a month – so something will have to give soon! This is compounded by the fact a number of landlords are looking to sell their rental properties in the coming months, as the property market in Nottingham has improved. This is further compounded as tenants in existing rental properties appear to be staying in properties for longer periods of time.

Looking at the rents charged in Nottingham, historic evidence in the UK suggests private market rents have moved in line with general inflation. Government figures only go back as far as the year 2000, but looking at other countries with similar housing markets (America, Australia, Ireland and Holland) the fact is rents paid by tenants tend to rise in line or just ahead of inflation.

As short term wage growth in Nottingham has eased off recently  (rising by only 1.3% in the last 12 months - taking average salaries in Nottingham to £22,639pa) and with the tax breaks announced by the Chancellor; I believe, even though rents have kept pace with inflation in the past, renting as an option has become more affordable - and is increasingly seen as a lifestyle choice. With returning economic growth and expected increases in the rate of growth of wages, above inflation rental growth could rise.

If you want a chat about the local Nottingham property market, pop in the for a coffee or email me on jaclyn.bartlett@centrickproperty.co.uk